Industry titans of the ‘20s Dish out ‘modern’ thoughts

“Wisdom from the Robber Barons”
By George David Smith & Frederick Dalzell
Castle Books, 2002


The book’s title is attractive enough – “Wisdom from the Robber Barons.” (I picked it out from a cozy bookstore called Libris Books.)

Mixing robbers and barons is intriguing. (I recall a text message, which says: Little thieves go to prison, while big thieves are elected to public office!)

Are we talking about the same thing in the case of this breed of barons? The authors give an explanation to this two-phrase appellation:

“Robbers – some of them anyway – became ‘Barons.’ Men like Henry Ford were not necessarily bent on getting rich – but they did.

As they build up business empires, harddriving industrialists acquired vast personal wealth. They became so rich that their holdings dwarfed those of the country’s traditional elite.”

But this book is much more than detailing the ways these robber barons got rich, as if money was there for picking.

Set in the period from 1970 to 1929, the historical accounts in this book prove the truism that “history repeats – and renews (if I may add) itself.”

We have been told about – and thus accustomed to – the idea that the rich and famous in a past as distant as the roaring twenties used crude and antiquated methods while on the way to making vast fortunes (and earning fame in the process).

But, if you read this lively history if the titans of industry – like Thomas Edison, Henry Ford, Andrew Carnegie, John Rockefeller, Alfred Sloan and J.P. Morgan – you will be surprised that they were ahead of their time.

We held the view, for example, the “customer-driven company” was a new thing.

But, Henry Ford said it sometime in 1908: “We start with the customer, work back through the design, and finally arrive at manufacturing.”

Theodore Levitt in the nineties went on to criticize “marketing myopia,” and batted for a “market-driven, not production-dictated strategy.”

We thought that relying heavily on advertising to sell products is a modern concept, but listen to Atlanta chemist John Pemberton, who concocted a dark sugar water: “If I could get $25,000, I would spend $24,000 for advertising, the remainder in making Coca Cola. Then we would all be rich.”

As business history would have it, a marketing wizard, Asa Candler, gained control of this giant soda firm.

And this century which we prefer to view as dominated by the “knowledge society,” we say that “thought capital” is a new thing, and coming up with crazy ideas is a newfangled reality.

But, what would you make of this quote from Mark Twain: “The man with a new idea is a Crank until the idea succeeds.” (I recall a quote that follows the same logic: “Coup plotters, when they fail, are terrorists; when they succeed, they are liberators.”)

On to saner matters… Were the robber barons thinking only of money? Harvey Firestone, who became the largest supplier of tires to Ford, said otherwise. “Thought, not money, is the real business capital,” he said.

On competing strategies, the book gives accounts of varying styles. Carnegie hated pirating managers.

In contrast, Rockfeller bought out rival oil refiners and pirated competitors’ business managers.

An interesting discussion on “creativity” and “bureaucracy” is instructive to us in this so-called modern business world where a “bureaucrat” is a bad name.

And yet, the pioneers confessed their need for a system-driven bureaucracy. The authors said: “Creators had to become, or give way to, bureaucrats.”

Were the robber barons aware of their social responsibilities? Much has been said about William Vanderbilt who was quoted as saying that, “The public be dammed”; and J.P. Morgan barking, “I owe the public nothing.”

The book explains this outburst: “Morgan’s response was actually more neutral. But it betrayed a deep public uneasiness with power that people like Morgan were accumulating”

Ford said something that underscores the social function of companies beyond profit. When asked by his shareholders, “What do you mean by “doing as much good as possible?” Ford’s answer was: “Give employment and sent out the car where the people can use it.” The shareholders countered: “Is that all?” Ford’s answers might as well be the reply of the devotees of corporate social responsibility:

“I suppose … incidentally, we make money.”

From the looks of it, the strategies and mindsets of these barons prove to be as timely and as relevant today as when they conquered territories in the past.

The difference is, their ideas come more fresh, simpler and more direct – shorn of complex theories and models.

Harking back to the creators would surely be useful for our “modern thinkers who would realize their ideas are not so modern after all.